Why clean-energy funding is politically easier than cap-and-trade

Dave Roberts didn't like my piece on clean energy funding as the next and likeliest strategy for climate policy. His argument rests on my contention that the politics of funding clean energy are better than the politics of taxing dirty energy. But he doesn't really make that case. He just argues that clean energy research doesn't appeal to many Senate Republicans.

True enough. But it doesn't split Senate Democrats as decisively as cap-and-trade does. Consider this paragraph from Ryan Lizza's tick-tock of the cap-and-trade fight:

Lieberman knew that the issue was almost as much regional as ideological. When he went to lobby Evan Bayh, of Indiana, Bayh held up a map of the United States showing, in varying shades of red, the percentage of electricity that each state derived from burning coal, the main source of greenhouse-gas emissions in the United States. The more coal used, the redder the state and the more it would be affected by a cap on carbon. The Northeast, the West Coast, and the upper Northwest of the country were pale. But the broad middle of the country -- Pennsylvania, West Virginia, Ohio, Kentucky, Indiana, Illinois -- was crimson. (Indiana, for example, derives ninety-four per cent of its electricity from coal). “Every time Senator Lieberman would open his mouth, Bayh would show him the map,” a Lieberman aide said.

Making coal power more expensive gets you that map, and loses you that vote. Funding research into biofuels does not. And if you want to take a step back, spending money on things is often popular and taxing things never is. That's why the politics are better.

Now, is it hard to scrounge up $25 billion a year? Absolutely. But the National Institutes of Health manage it -- and more. A bad economy and a large deficit have us freaked out about new revenue, but when the economy recovers, some of that will ease. Consider the Bush years, where trillions in tax cuts and Medicare expansions got tossed onto the deficit, or the Clinton years, when S-CHIP was created. We even got money for clean-energy research in the stimulus. You can spend money for popular things. And clean energy -- and dominating new, high-tech industries -- is a popular thing, or at least is more likely to be popular than taxing energy.

That doesn't mean we should abandon cap-and-trade. As I said in the original piece, a price on carbon is still the best possible policy here, and I'll be saying more on that soon. But just as we got a lot of S-CHIP and Medicaid expansions before we got the Patient Protection and Affordable Care Act, I think we can get some serious funding for clean energy over the next few years, even if cap-and-trade takes longer, or never happens.

So, you neoliberals say the economy's about to recover. I know it's really rude to ask this, but, what if you're wrong? What if, as happened every other time you gave us your opinion, neolibs were totally wrong?

Ezra didn't say the economy is "about" to recover, just that it will. Is your position that the economy will never ever recover?

To the post, I think this is a very smart point, and probably good politics. Unlike healthcare, however, where I knew that the deficit would eventually force some kind of massive overhaul even if we didn't get it right away, I just hope that these half measures that we can get while we wait for the big energy overhaul don't put us passed the point where anything can be done on climate change.

Indiana must be changing, because driving I-65 from Chicago to Indianapolis you will now see a massive wind farm that has sprung up suddenly in the middle of cornfields. Apparently, the 121 turbines are generating about 200 megawatts right now, enough to power 60,000 homes, and it is scheduled to increase its output in successive phases to 500 megawatts, with 660 turbines. I happen to think these wind farms are very beautiful. (See http://www.horizonwind.com/home/)

So yeah, I agree that fighting coal is a losing battle while pushing alternatives is an easier sell.

Two things:
First, a map of long-term unemployment would probably have the same states red (along with some sun-belt smoking craters like Vegas). You'd think they'd want jobs.
Second, finding $25 billion is actually pretty easy - eliminate every single subsidy and tax break to the oil, coal and gas industries. As an added bonus, you might make those fuels more expensive, too, once you "free the market" to do its work.

There is a big difference between "good politics" and being "smart" or right.

I'm tempted to say that in a free country you don't get to force your fellows to adopt your values on the basis of flimsy, and in some cases, corrupt, science, but I'll say instead that in a free country you don't get to force your fellows to adopt your values, period.

I, for one, would welcome a slightly warmer climate, however, I personally respect your right to curtail your own hot air to whatever extent suits your nature, as silly as I think that would make you.

That's awesome, msoja! We should dump that criminal code right away because heaven forbid someone's values and actions are curtailed by the values of others. I can't wait until we stop enfocing patents, because somebody doesn't think patent infringement is a big deal.

Ezra is right on both counts: the politics of subsidies work better, but from a policy and economic perspective carbon pricing is the best way to go.

What is left unsaid here though is how MUCH better, as in more economically efficient, carbon pricing is compared to cleantech subsidies. It's not even close. How much carbon reduction could we realistically expect to see from an extra $25b/year in subsidies? It would depend on how well the government manages to pick winners, but even if they did it reasonably well and not atrociously poorly (which is not a safe assumption), the effect would be small.

With cap and trade we get actual carbon emission reduction at a fairly reasonable price. With subsidies, paying a comparable price, we likely get only a small reduction in the GROWTH RATE of carbon emissions. Not a good tradeoff.

It's fine to say that funding clean energy is politically easier than pricing carbon. I wouldn't argue that at all.

But that in no way demonstrates that funding clean energy actually translates into a significant reduction in emissions absent either a price on carbon or obscene government subsidies of whichever clean technologies are determined to be the "winner" by an unknown administration decades from now (while in the mean time we've locked in a tremendous amount of carbon-intensive infrastructure). What technology can possibly compete with coal in countries like the US or China on the relevant timescales absent a tremendous governmental intrusion into the energy market? As of now, none exist and none are even remotely plausible.

So we're supposed to bet that one happens to get developed, that's cheaper than coal without enormous government subsidies. Exceedingly unlikely, but let's stipulate it for the purposes of argument. This "breakthrough" technology not only has to outcompete coal on the domestic market, it has to make coal so worthless as to leave in the ground rather than export it or turn it into synthetic gasoline.

See where I'm going with this? The "breakthrough" scheme is misdirection, not a mitigation strategy, until it can articulate how it leaves coal in the ground absent the kind of hand-waving that could just as easily resurrect the prospects of cap-and-trade.

I thought that you saw through the "technology trap". The breakthrough scheme is just a that under a different name with the endorsement of some think tanks you lunch with.

Energy independence? The idea of it is politically popular, but economically it's arbitrary (what is the point of making energy if we can import it much cheaper?), and even more importantly, it's practically impossible. We'd have to be exporting as much energy as we import in the form of oil and LNG. It sounds like a nice goal, but the numbers don't add up in any scenario.

--*That's awesome, msoja! We should dump that criminal code right away because heaven forbid someone's values and actions are curtailed by the values of others.*--

You're being childish, and foolish. A. Rights are not rocket science. Your right to swing your fist ends short of my nose. How many thousands of entries in the federal register do you need to fathom it. B. The bloated U.S. criminal code is a joke that constantly violates the rights of its citizens. Marijuana? Shower nozzles? Videotaping corrupt police? C. What the oy vey does the criminal code have to do with saddling the citizenry with inane, moronic global warming legislation?

It would make more sense to abolish the arbitrary granting of the patent monopoly by the state than to pretend the law isn't on the books. Patents are, as you ought to know, a creation of the state, ie., are the granting of a right to a political constituency for purely political considerations. The way I understand it (the topic is popular at Mises.org and TechDirt.com), there is little evidence that patent laws achieve that for which they are enacted, but that can be said for almost everything the government does.

Now, what do you think gives you the right to impose climate change legislation on your fellows, many of whom are quite sure your fears on the subject are misguided, if not outright moronic?

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